Integrating 3D printing and inventory to manage multi-product demand uncertainties

Abstract

Recently, many firms have rapidly adopted 3D printing technology to better align their supplies with demands and enhance profitability. We examine a firm that sells multiple products and utilizes 3D printing to navigate uncertain demands. Initially, the firm determines product inventories, 3D printing capacity, and raw material investments. Once the demands are realized, they are first met using the existing inventories, with any excess fulfilled through 3D printing. We analyze the optimal policy and profit, comparing the outcomes with and without 3D printing to assess its value. Our findings indicate that 3D printing is advantageous when investment and raw material costs are low. In addition, we explore how various parameters affect this value, identifying two key benefits of 3D printing: cost-saving and flexibility. Given the complexity of determining an exact optimal policy for the general case, we propose a heuristic algorithm to address this challenge. Finally, we investigate the influence of product characteristics, diversity, and supply disruption risks on the value of 3D printing, concluding that its value increases with product diversity and it can effectively mitigate supply risks.